Social Opportunities and Business Model Design: Evidence From Three Social Enterprises

The tremendous pressures of growing social needs pose relevant challenges for governments attempting to allocate resources to deal with deficiencies and failures. At the same time, non-profit organizations, facing rising costs, intense competition over grants and donations, and ever-growing social needs, are struggling to financially sustain their operations. Scholarly research on Social Enterprises has been growing, mainly dealing with Social Enterprises as entrepreneurial endeavors and peculiar types of business models. However, the growing number of Social Enterprises and their relevance within communities is calling for better use of established theories and models from the strategic management and entrepreneurship literatures within the domain of Social Enterprises. The present research aims at addressing the transition that leads Social Enterprises from the identification of the social opportunity to business model design. By means of a series of semi-structured interviews to entrepreneurs from three different Social Enterprises, we lay the foundation for a closer investigation on opportunities in Social Entrepreneurship. We distinguish two composing aspects of Social opportunities: a social aspect, and an economic aspect of the opportunity, the recognition of which does not necessarily happen simultaneously. We then relate this finding to the transition towards business model design and reveal that, while the social aspect is the driving force of the entrepreneur, the recognition of the economic aspect signals the moment of mobilization of the social entrepreneur. Finally, we find that different typologies of social enterprises experience the transition to business model design differently, depending on how intuitive or challenges is the identification and exploitation of the economic aspect of the opportunity. We thus contribute to scholarly theory on entrepreneurship and business models, by extending the discourse on social business model design and social opportunity recognition, as well as provide actionable guidelines to social entrepreneurs struggling with translating the social opportunities, they have recognized into sustainable business models.